1. The Field of the Invention
The present invention relates to physical financial instrument processing. More particularly, the present invention relates to a method and system for remotely processing checks through electronic interaction between the physical location of the instrument, a depository financial institution, and the check maker financial institution.
2. The Relevant Technology
The act of depositing or otherwise converting a financial instrument such as a check, draft, or other instrument has generally required the physical presentment of the instrument by the bearer to a financial institution such as a bank, credit union, or other institution authorized to accept and process monetary instruments. Indeed, the depositing and clearing of checks has heretofore involved individuals or organizations physically taking their deposit, such as in the form of a check, to financial institutions or trusted remote institutional branches, otherwise known as the bank of first deposit 101, where the deposit may be accepted, and credited to the bank customer's account, of course, subject to the check “clearing” with the maker financial institution. Depositing is the act of the payee (person to whom the check is payable and also known as the depositor) of a check, or other monetary instrument such as a postal money order, travelers check, etc., taking the monetary instrument to a bank where the payee has a deposit account (such as a checking account or savings account) and having the payee's bank credit the amount of the check into the payee's deposit account and forwarding the check to the bank of the check drawer (person who makes out a check and presents it to another person or company for payment of a debt, etc.) for the purpose of removing the amount of the check from the check drawer's checking account and forwarding that money to the payee's bank for crediting to the check payee's deposit account. All of the processes associated with the payee's bank accepting the check for deposit, crediting the check amount to the depositor's account, forwarding the check to the maker bank for clearing of funds back to the payee's bank can be referred to individually and collectively as post deposit processing. Maker bank, maker bank and drawer bank all are used to identify the bank on which the check is drawn and in which the account of the person responsible for making the check is located. Check maker, maker, payor are terms used to identify the person who wrote the check and who is responsible for paying the person who has been given the check in settlement of a financial obligation. Check Payee or payee are terms used to identify the person or other entity who the check was written in payment for some financial obligation.
Financial institutions have developed methods for reducing the amount of paper flow associated with checks within their organizations, however, their target has not been to reduce processing costs, improve the timeliness of the money collection from other financial institutions, and reduce costs associated with handling, storing and returning paper checks to the maker. Therefore, it would be an advancement to provide a new system centered on electronic information that does not require the transportation of an original paper item for deposit and presentment at the maker bank.
Therefore, it would be advantageous to provide an electronic processing system and method that could provide a bearer of a check the convenience to “deposit” a check at a facility, such as a home or office, that is not necessarily a traditional bank or bank branch facility.
It would also be advantageous to provide a method and system for allowing the remote depositing and processing of a check that does not require the physical routing of the actual check in order to accomplish the various post-deposit processing of a check. It would yet be a further advantage to provide a method and system for improving the collection time involved with the funds represented by the check (i.e., reduce credit “float”). Float on an item defines how long it takes a monetary item to go through the check collection process and have the funds represented by the amount of the check withdrawn from the check maker's checking account and credited to the check depositor's checking account.
It would be a benefit to provide a method and system for reducing expenses associated with the transportation costs involved in sending the checks from the bank of first deposit 101 to the maker financial institution. It would be a further benefit to provide a method and system to automate and expedite the settlement processes associated with clearing checks between financial institutions. Settlement processes are the processes involved in transferring the money associated with a monetary item from the check maker's account at the maker bank to the payee's deposit account at the bank of first deposit 101.
It would also be a benefit to provide a method and system for reducing the check storage expenses incurred by the bank of first deposit 101.
It would be a further benefit to enable the bank of first deposit 101 to reduce the staffing, facilities (i.e., physical buildings), and equipment required to accept and process physical checks.
It would be yet another benefit for the settlement process to be automated in a manner that enables all of the accounting entries required to settle the funds between the depositor's account and the check makers account to be done automatically thus reducing the manpower costs and time involved in the traditional check deposit settlement process.